Higher interest rates drove a turnaround for annuities in 2013, boosting profit at Allianz Life Insurance Co. of North America.

Sales of fixed index annuities, which are the Golden Valley-based company's claim to fame, jumped 11 percent. That's a big change from 2012, when they suffered a double-digit decline.

Allianz Life President and CEO Walter White said in an interview Thursday that the uptick came in the second half of the year and was particularly strong in the fourth quarter. The momentum has continued in the past two months.

"We're still selling at very high levels," White said.

Operating profits at Allianz Life rose 10 percent last year to $646 million. Total premiums, or sales, climbed 4 percent from a year earlier to $9.7 billion, after showing serious declines in recent years as rock-bottom interest rates took a toll.

White attributed the pickup to a popular new index strategy the company has added on some of its fixed index products that moves balances back and forth between a bond index and equity index to control volatility. Training employees and registered representatives who normally sell only variable annuities to also sell fixed index annuities has also driven increased sales, he said.

Annuities are insurance products used for retirement, with a reputation for being complicated. At their simplest, buyers put down a lump sum for a regular stream of pension-like payments.

Fixed annuities offer a guaranteed payout, while variable annuities are higher risk, with payments based on the performance of underlying investments.

Allianz Life is the country's No. 1 seller of fixed annuities. Its sales of variable annuities continued declining last year, dropping 9 percent.

The entire annuities industry has seen a lift from higher interest rates, with U.S. annuity sales growing at their fastest clip in 11 years in the fourth quarter, according to the insurance research organization LIMRA. That's driving more product innovation and new channels for marketing the products, the group says.

"You want to buy a house at lower interest rates, you don't want to buy an annuity at lower interest rates," LIMRA spokeswoman Catherine Theroux said.

Sheryl Moore, president and CEO of annuity research firm Wink Inc., said she thinks Allianz Life's relatively new "Allianz Preferred" program has boosted sales. The program gives distributors exclusive rights to sell certain Allianz Life products and has a special commission structure.

"It's been a game changer in the indexed annuity market," Moore said. "The secret sauce is that commission structure."

The industry average commission for indexed annuities is 5.66 percent of the buyer's lump sum premium payment, a 17-year low, Moore said.

Allianz Life doubled its "Preferred" force over 2013 to about 10,000 independent contractors, White said. The "Preferred" group's largest-selling product is a fixed index annuity called 360, he said.

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